Analysts downplayed the speculation, noting that such a
transaction is unlikely to occur because film maker Kodak is
less than half the size of Xerox by market capitalization and
is in the midst of a restructuring following years of turmoil
in its business.

Xerox spokeswoman Christa Carone declined comment, saying
the company would not respond to rumors and speculation. Kodak
had a similar response.

Xerox shares have a market value of about $16 billion, more
than twice Kodak's market capitalization of about $7 billion.

"I don't see Xerox getting bought out," said Paul Foster,
an options analyst with Chicago-based theflyonthewall.com who
reported the rumor on the financial news Web site on Monday.
"But I reported it because that was the chatter on trading
desks this morning."

Some 23,000 Xerox options had changed hands as of Monday
afternoon. That is more than 21 times the average daily volume
over the past month, according to market research firm Track
Data.

"We do see an interest in Xerox call options today. There
are rumors of a possible takeover," said independent options
trader Robert Leone at the Chicago Board Options Exchange. "But
this is not the first time that Xerox has been mentioned as a
takeover candidate."

Stamford, Connecticut-based Xerox shares rose 30 cents, or
1.8 percent, to $17.03 in late afternoon trade on the New York
Stock Exchange. Eastman Kodak shares fell 15 cents, or 0.6
percent, to $25.48.